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Views on Union Budget 2017-18

Had this year’s union budget been presented in any other “normal” year, the current euphoria around it could have been understood. But alas, this year was unfortunate enough to see the ripple effects of the imposition of a new “normal” upon us. Demonetisation was widely regarded as a nudge to a cashless society. This is gross injustice to the very philosophy of libertarian paternalism that behavioral economists like Richard Thaler and Cass Sunstein (authors of Nudge) endorse. The authors explain nudge as an intervention that is easy and incurs low cost in its implementation. To call this “despotic measure” a nudge goes against the conscience of the average citizen and is tantamount to a callous indifference to the numerous deaths and hardships caused in the process. Never mind the falling growth rate hitherto, demonetisation has pushed the economy to a recessionary trough; the spillover effects of which the Centre for Monitoring Indian Economy(CMIE) assumes to last for another five years or so. This is compounded by the uncertainties in the global arena. The US that is heralded as the torchbearer of liberal capitalism is turning protectionist, while India (despite its large domestic market) seems to continue embracing the uncertainties of global finance. Set against this backdrop of extraordinary times, the Union Budget has missed the last ride to redemption by being utterly unimaginative.

Deconstructing the claims

The budget is a financial statement as well as a political document. As usual, the former was used for statistical jugglery while the latter created the necessary smokescreen. The MGNREGA hailed as the "the largest and most ambitious social security and public works programme in the world" had been systematically diluted over the previous years in the name of fiscal consolidation. The so-called record allocations were merely marginal increases in allocation when compared to the revised estimates of the previous year. Hours after the budget speech, the People’s Action for Employment Guarantee released a statement that the increase was just 1% when the supplementary allocations are also factored in. The mandatory Aadhar requirement, despite the Supreme Court’s foreboding, makes it an exclusionary programme violating the right to work. The minister talked about doubling farmer’s income by 2022, but provided no significant roadmap for the same. There seems to be no concession for the debt-ridden farmers through any loan waivers either. SC/ST allocations have been hit after the Plan/Non-Plan components have been done away with which is being called a retrogressive step by activists. This is not even good politics given that the previous year saw a surge in Dalit uprisings.

India might be competing to become the next big private investment destination, but it ranks along with the poorest Sub-Saharan African countries in terms of health outcomes. The budget did virtually nothing to resolve the issues plaguing the public health sector for which India spends a meager 1.3% GDP. The hike in spending is again statistical jugglery as the government had cut down expenditure in the previous years. India has one of the highest Out Of Pocket Spending in health and Universal Health Coverage remains a distant dream. Ambitious targets like the elimination of TB in 2025 have been set, which seem unachievable given that India is regarded as a High Burden Country by the WHO. The budget retains its notoriety in spending low for education (3.8% GDP) which can severely hamper the prospects of harnessing the demographic dividend of the country. The Sarva Shiksha Abhiyan was allocated just around 1000 crore this year and there was a talk on improving learning outcomes with no commensurate allocation. Rich in narration, the much needed spending is nowhere to be seen. The austere resolve to stick to a fiscal deficit target of 3% in the coming years shows the government’s love affair with the status quo necessitated by the interests of global finance.

The Budget that focused on creating a tech India, adopts measures that are equivalent to putting the cart before the horse. The push to a digitalised economy requires a major upgradation of cyber security infrastructure which is scandalously ill equipped. One cannot help but wonder why Aadhar is mandatory for securing employment, but not so for making political donations.

One of the striking features of India is its unprecedented growth of inequality. The chasm between the rich and the poor as shown by the recent Oxfam report overshadows the statistics the minister quoted to lament over the poor tax compliance of the average Indian. Wittgenstein had warned us of the limits of language limiting perception. Thus when tech India, FDI and growth (never mind demonetisation) are talked about with much hype, one should not forget grim statistics of over 1.5 lakh manual scavengers or over 19.4 lakh people living in hunger in India. Duality seems to be ironically the rule of the land where non-duality was preached with much élan.